Fitch Expects to Rate Interbank's Subordinated Notes Maturing 2029 'BBB-(exp)'

NEW YORK--()--Fitch Ratings expects to rate Banco Internacional del Peru Interbank S.A.A. (Interbank) upcoming U.S. dollar subordinated notes 'BBB-(exp)'. The notes (for an amount to be determined) will mature in 2029, and interest payments will be made semi-annually until 2024 and quarterly thereafter. The notes will carry a fixed interest rate to be determined at closing until 2024 and a LIBOR-based floating rate thereafter. The final rating is contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS

Interbank has a long-term local and foreign currency Issuer Default Ratings (IDR) of 'BBB'; both of them driven by Interbank's Viability Rating (VR), which is currently at 'bbb'. Interbanks's ratings reflect its strong retail franchise, consistent and sound performance, adequate credit policies and risk management tools, good asset quality, strong capital/reserves cushion and stable, adequate funding.

Following Fitch's criteria, the notes will be rated one notch below Interbank's VR, reflecting one notch for loss-severity, but no notches for incremental non-performance risk relative to the bank's VR.

The notes rank junior to Interbank's senior unsecured debt and will be effectively subordinated to all of Interbank's secured indebtedness with respect to the value of its assets securing that indebtedness, certain direct, unsecured general obligations that in case of insolvency are granted preferential treatment pursuant to Peruvian law, and all of the existing and future liabilities of Interbank's subsidiaries, including trade payables. The notes will rank pari-passu with all of Interbank's existing and future subordinated debt and will be senior to Interbank's existing and future junior subordinated debt.

Interbank will use the proceeds for general business purposes. Considering the bank's solid capital levels and sound profitability, the impact on the bank's leverage is not deemed significant by Fitch.

RATING SENSITIVITIES

The subordinated notes' rating is sensitive to any changes in Interbank's VR. In particular, Interbank's VR could benefit from more diversified funding sources, while continuing to produce a sound performance and maintaining the strength of its balance sheet, maintaining adequate asset quality, capital and reserves.

On the other hand, Interbank's ratings could be downgraded if a severe decline in asset quality or weak profitability erode its capital and reserve cushion.

KEY ASSUMPTIONS AND SENSITIVITIES

The ratings and Outlook are sensitive to the following assumptions:

--Interbank's operating environment will continue to benefit from a sustained economic growth with little or no downside on the employment front.

--The bank will grow at a moderate pace so as to not pressure its capital levels while credit criteria will remain stable and expansion into new segments/products will not be overly aggressive. Asset quality is expected to decline moderately as loan portfolios mature.

--Interbank will manage network expansion/operating expenses to underpin efficiency and maintain profitability at par or better than that of its peers.

An adverse change to the above assumptions could pressure the bank (and its debt) ratings.

Fitch currently rates Interbank as follows:

--Long-term foreign currency IDR 'BBB', Stable Outlook;

--Short-term foreign currency IDR 'F2';

--Long-term local currency IDR 'BBB', Stable Outlook;

--Short-term local currency IDR 'F2';

--Viability Rating 'bbb';

--Support rating '3';

--Support floor 'BB+';

--Senior unsecured debt 'BBB';

--Subordinated debt 'BBB-';

--Junior subordinated debt 'BB-'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'Assessing and Rating Bank Subordinated and Hybrid Securities' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Assessing and Rating Bank Subordinated and Hybrid Securities Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732137

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=823310

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Veronica Chau
Director
+52-81-8399-9156
or
Rating Committee Chairperson
Franklin Santarelli
Managing Director
+1-212-908-0739
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Veronica Chau
Director
+52-81-8399-9156
or
Rating Committee Chairperson
Franklin Santarelli
Managing Director
+1-212-908-0739
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com